Home › Forums › Financial Markets/Economics › Bernanke did the right things
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sdrealtor.
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January 30, 2012 at 10:25 AM #736940January 30, 2012 at 10:39 AM #736942
Anonymous
Guest[quote]Ben Bernanke is forcing them to do.[/quote]
Bernanke is “forcing” people? I’ve never seen him carry a gun. Since when can the Fed put people in jail?
[quote][…] they would be getting healthy 5%+ returns on investment with little risk.[/quote]
What investment would pay 5% with little risk?
Why is 5% “healthy?”
(BTW: Very few seniors have all of their assets in fixed income. That’s a myth. There are probably more seniors paying 1978 property tax rates than seniors that are dependent on fixed income government securities.)
January 30, 2012 at 10:51 AM #736944markmax33
Guest[quote=pri_dk][quote]Ben Bernanke is forcing them to do.[/quote]
Bernanke is “forcing” people? I’ve never seen him carry a gun. Since when can the Fed put people in jail?
[quote][…] they would be getting healthy 5%+ returns on investment with little risk.[/quote]
What investment would pay 5% with little risk?
Why is 5% “healthy?”
(BTW: Very few seniors have all of their assets in fixed income. That’s a myth. There are probably more seniors paying 1978 property tax rates than seniors that are dependent on fixed income government securities.)[/quote]
Pri – 5% is healthy because that’s what they planned on. It is what they could have expected based on the last 50 years in the market. They didn’t plan to get a 2% return on investment. That is a 60% decrease!
CDs have carried a 5% RoR in recent history and are seen as safe.[img_assist|nid=15785|title=CD Rates|desc=CD Rates|link=node|align=left|width=100|height=58]
As much as I don’t care for what the babyboomers did for this country – sinking us into $16T in debt – I don’t think we should change the rules on them and sink all of their retirement accounts.
Yes Bernanke carried a gun and put it to their head. He price fixed the rate of return on their retirement and made them take a much riskier position to survive then they projected. Who else could have done it?
January 30, 2012 at 11:36 AM #736954GuestDude, the inconsistencies in your arguments are hilarious.
Citing 50 years of economic “stability” and then turning around and blaming the Fed.
In your world, the Fed only exists when bad things happen.
Do you even know what the charter of the Fed is?
(Hint: It’s not to guarantee Nana 5% on her bank CDs)January 30, 2012 at 12:03 PM #736962Guest[quote=pri_dk]Dude, the inconsistencies in your arguments are hilarious.
Citing 50 years of economic “stability” and then turning around and blaming the Fed.
In your world, the Fed only exists when bad things happen.
Do you even know what the charter of the Fed is?
(Hint: It’s not to guarantee Nana 5% on her bank CDs)[/quote]I didn’t say or mean economic stability, I said they had a rate of return that they could have “safe”ly projected and now the Fed has chosen to reduce it well below where they had it for the last 50 years. There isn’t a single inconsistency in the statement. The Fed is choosing to punish them. In a free market system I doubt interest rates would ever be anywhere close to 0%. Life and business has much more risk than that. Please get your facts straight. Those are two completely different things.
January 30, 2012 at 12:30 PM #736965sdrealtor
ParticipantWhile getting punished by the low rate environment my mothers portfolio returned about 15% last year by investing in stable high dividend fortune 500 companies. I dont know that she will ever recover from that beating….snark off.
January 30, 2012 at 1:36 PM #736975bearishgurl
Participant[quote=markmax33] . . . As much as I don’t care for what the babyboomers did for this country – sinking us into $16T in debt – I don’t think we should change the rules on them and sink all of their retirement accounts.
Yes Bernanke carried a gun and put it to their head. He price fixed the rate of return on their retirement and made them take a much riskier position to survive then they projected. Who else could have done it?[/quote]
markmax, I will beg to differ with you on this point only. If you are referring to “$16T” as “housing bailout” debt, I don’t think “boomers” were as major of a player (on the consumer end) of this debacle as were “Gen X-ers” with their inordinately high housing expectations (even for their first homes), as well as their overly high expectations for luxury and/or large vehicles and other consumer items.
In 2004, when the “millenium boom” was going into full swing, “boomers” were 40-58 years old. The older half (born 1946 – 1955) were 49-58 years old at that time and the vast majority of this demographic already owned their principal residence PRIOR to the millenium boom taking hold (and may have owned several properties in their lifetimes by then).
Except for two single women (one 64 yo and one 54 yo – both unsophisticated and grossly taken advantage of by mtg brokers), my personal experience during the “millenium boom” has shown me that the vast majority of underwater homeowners were in the very late boomer or “Gen X” demographic. These were the typical “school-attendance-area chasers” and neighborhood chasers who took out all forms of exotic purchase-money financing and ATM’d their principal residences to death (ostensibly to “keep up with the Joneses”), resulting in the level of distress in the RE market we see today.
About half the “early/mid boomers” I am acquainted with own their principal residences outright (read “free and clear”). Another quarter owes less than $150K on their principal residences. These homeowners’ principal residences are located all over SD Metro, East and South County in areas whose values vary wildly from one another.
Boomers, for the most part, did not grow up with many modern conveniences in their family homes and their family vehicles did not have the amenities they did 10-20 years later. Therefore, boomers’ expectations for their first and subsequent homes (as well as consumer goods) was/is far less than it is/was for the more “coddled” Gen-Xers.
Not trying to slam an entire generation here. I’m just stating that there is a vast difference in values between a typical early/mid boomer (now approx 57-66) and a typical Gen X-er (now approx 33-48).
The values difference is generational (mainly due to improvements in technology and urban sprawl), which caused Gen-Xers expectations to be MUCH higher than their predecessors.
“Boomers” (especially older boomers) are being given a “bad rap” by some as being irresponsible buyers/borrowers during the “millenium boom” when they only played a bit part in the “RE crash of 2008,” IMHO.
January 30, 2012 at 1:47 PM #736977Guest[quote=sdrealtor]While getting punished by the low rate environment my mothers portfolio returned about 15% last year by investing in stable high dividend fortune 500 companies. I dont know that she will ever recover from that beating….snark off.[/quote]
How much did she lose in 2008? Snark off? Come seriously? I thought I was junior person on this board. I have to tell 60 years olds beginning retirement advice? You are not supposed to be heavily weight in stocks as you get towards retirement. Just because your mother is lucky for a year you call that a trend?
January 30, 2012 at 1:50 PM #736978Participant[quote=markmax33][quote=sdrealtor]While getting punished by the low rate environment my mothers portfolio returned about 15% last year by investing in stable high dividend fortune 500 companies. I dont know that she will ever recover from that beating….snark off.[/quote]
How much did she lose in 2008? Snark off? Come seriously? I thought I was junior person on this board. I have to tell 60 years olds beginning retirement advice? You are not supposed to be heavily weight in stocks as you get towards retirement. Just because your mother is lucky for a year you call that a trend?[/quote]
IIRC, sdr’s mother is in her eighties and sdr is managing her portfolio, lol. Perhaps I have this incorrect??
January 30, 2012 at 1:54 PM #736979Participantdupe
January 30, 2012 at 2:04 PM #736981Guest[quote=bearishgurl][quote=markmax33] . . . As much as I don’t care for what the babyboomers did for this country – sinking us into $16T in debt – I don’t think we should change the rules on them and sink all of their retirement accounts.
Yes Bernanke carried a gun and put it to their head. He price fixed the rate of return on their retirement and made them take a much riskier position to survive then they projected. Who else could have done it?[/quote]
[quote=bearishgurl]
markmax, I will beg to differ with you on this point only. If you are referring to “$16T” as “housing bailout” debt, I don’t think “boomers” were as major of a player (on the consumer end) of this debacle as were “Gen X-ers” with their inordinately high housing expectations (even for their first homes), as well as their overly high expectations for luxury and/or large vehicles and other consumer items.
[/quote]The Gen X-ers most certainly ran up the debt, but who put the policies in place that allowed the system to get into the current state? I blame the fed and boomer generation for being asleep at the wheel and putting in policies that allowed the Gen X-ers to go nuts. Unfortunately many of the baby boomers forgot the lessons of their grand parents and voted for policy makers that allowed this to happen. If they had stood up and protested we would have been in much better shape.
[quote=bearishgurl]
In 2004, when the “millenium boom” was going into full swing, “boomers” were 40-58 years old. The older half (born 1946 – 1955) were 49-58 years old at that time and the vast majority of this demographic already owned their principal residence PRIOR to the millenium boom taking hold (and may have owned several properties in their lifetimes by then).
[/quote]See above.
[quote=bearishgurl]
Except for two single women (one 64 yo and one 54 yo – both unsophisticated and grossly taken advantage of by mtg brokers), my personal experience during the “millenium boom” has shown me that the vast majority of underwater homeowners were in the very late boomer or “Gen X” demographic. These were the typical “school-attendance-area chasers” and neighborhood chasers who took out all forms of exotic purchase-money financing and ATM’d their principal residences to death (ostensibly to “keep up with the Joneses”), resulting in the level of distress in the RE market we see today.
[/quote]What enabled this foolish spending? Do you blame to population or the people supposed to be putting in policies to protect from these sort of things? I actually think the population did exactly what I would expect they would do 100% of the time.
[quote=bearishgurl]
About half the “early/mid boomers” I am acquainted with own their principal residences outright (read “free and clear”). Another quarter owes less than $150K on their principal residences. These homeowners’ principal residences are located all over SD Metro, East and South County in areas whose values vary wildly from one another.
[/quote]okay.
[quote=bearishgurl]
Boomers, for the most part, did not grow up with many modern conveniences in their family homes and their family vehicles did not have the amenities they did 10-20 years later. Therefore, boomers’ expectations for their first and subsequent homes (as well as consumer goods) was/is far less than it is/was for the more “coddled” Gen-Xers.
[/quote]Agreed see above. The Baby Boomers shouldn’t have agreed to things like Fannie Mae and Freddie Mac back in 1970 before the Gen Xers were born:
http://en.wikipedia.org/wiki/Freddie_Mac
[quote=bearishgurl]
Not trying to slam an entire generation here. I’m just stating that there is a vast difference in values between a typical early/mid boomer (now approx 57-66) and a typical Gen X-er (now approx 33-48).
[/quote]I agree the Gen X-ers went nuts based on the policies that the Baby Boomers put in place.
[quote=bearishgurl]
The values difference is generational (mainly due to improvements in technology and urban sprawl), which caused Gen-Xers expectations to be MUCH higher than their predecessors.
[/quote]NO! The difference was the system set up by the Baby Boomers! If they hadn’t allowed their kids to walk all over them, this would have never happened.
[quote=bearishgurl]
“Boomers” (especially older boomers) are being given a “bad rap” by some as being irresponsible buyers/borrowers during the “millenium boom” when they only played a bit part in the “RE crash of 2008,” IMHO.[/quote]They weren’t the main investors but they were the main enablers. Not voting and learning from the great depression stories of your grandparents does seem irresponsible to me. I remember the stories vividly and I was one generation removed.
January 30, 2012 at 2:24 PM #736986Guest[quote=markmax33]I didn’t say or mean economic stability, I said they had a rate of return that they could have “safe”ly projected […][/quote]
A world where one can “safely” project 5% returns, and yet there is no economic stability?
You have a gift – an ability to confidently make absurd contradictions in a single sentence.
Kinda like Yogi Berra, but not nearly as lovable.
January 30, 2012 at 2:54 PM #736989Guest[quote=pri_dk][quote=markmax33]I didn’t say or mean economic stability, I said they had a rate of return that they could have “safe”ly projected […][/quote]
A world where one can “safely” project 5% returns, and yet there is no economic stability?
You have a gift – an ability to confidently make absurd contradictions in a single sentence.
Kinda like Yogi Berra, but not nearly as lovable.[/quote]
Pri –
I’d personally say 5% is too low. I think if we had a free market it would be around 7% or 8% generally but would swing up and down more.
You have an ability to attack people with no common sense and no valid points. I guess we are equal.
January 30, 2012 at 3:32 PM #736994Participant[quote=markmax33]…The difference was the system set up by the Baby Boomers! If they hadn’t allowed their kids to walk all over them, this would have never happened.[/quote]
markmax, the majority of boomers’ kids are of the “Gen Y” or “Millennial” generation (born 1979-1998).
Only a small segment of early boomers who had children young, married young, escaped the draft and/or likely did not go to college right out of HS have “Gen X” children who are US citizens (born 1965 – 1978).
The parents of most Gen X-ers were of the WWII-era “Silent” generation (born 1928 to 1945).
The parents of most early/mid Boomers were of the “Greatest Generation” (born 1901 – 1927) and are currently very elderly, if still alive.
Of course there is overlap between the generations of parents of Boomers and Gen-Xers.
[quote=markmax33]The Baby Boomers shouldn’t have agreed to things like Fannie Mae and Freddie Mac back in 1970 before the Gen Xers were born..[/quote]
markmax, the only “boomers” that were voting in 1970 were those born between 1946 and 1952 (18-24 year-olds). A large portion of this six-year demographic were FT college students or stationed in Vietnam (or hitchhiking across the continent, lol) and NOT living in their home jurisdiction and thus NOT available and/or registered to vote!
“Absentee ballot voting” did not exist then as we know it today.
Beginning in 1986, the first “Gen X-ers” were allowed to vote. Therefore, we could assume that beginning in (peacetime) 1986, Gen-Xers began voting for their representatives in Congress and State Legislators who have put in place the policies we have today :=]
January 30, 2012 at 9:47 PM #737016ParticipantHardly dumbass. My mother is 81 years old. She is the best insured person I know. She has been in assisted living for the last 4 years and hasnt paid a penny for it. Its all been covered by insurance. Instead of spending down her savings they are steadily climbing. We were setting up trusts and doing estate planning while you were diapers.
Up until last year she was all in fixed income securities. My parents were smart enough to tie all their money in 15% 10 year CD’s when rates were that high. They havent had a down year since the mid 80’s when they lost money on Whoops Bonds (google it if you dont know what it is). Last year I finally convinced her that she was no longer investing her money as there was no way possible she could come close to outliving her money. The reality was she was investing her kids money now. The money was in CD’s at the rates you say were punishing seniors so we moved alot of them because the timeline was no longer her life it was her baby boomer children who are all still 10 years or more from retirement age. The truth is with the possible exception of one of us, the other 3 dont need the money and would be happy to see her live to 120.
Luck has never played a part of what we do. We are smart yet conservative. We didnt buy growth stocks last year we bought stable Fortune 500 (more like Fortune 50) companies paying high dividends. We dont like taking big risks and just wanted income for the next several years for her. The punchline is….the rest of the country decided they wanted that too several month after we did and not only did we get close to 5% dividends on the portfolio but we got double digit appreciation which beat the growth stockls too. Yep, just call us a bunch lucky yocals following the trends. LOL
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